Here is the evidence from the CGR CC on 13-Aug-2012. ........ ..............
Caller - Private InvestorI had a question. You have been stating that you are cash flow positive and I am just wondering if guys have calculated at what price of gold does that cash flow positive turn into cash flow negative?
Neil McMillan - President, Chief Executive OfficerRick, our Chief Financial Officer, may have a number for you but let me tell you, in general, the amount of flexibility that we have on expenditures and in our production, gives us some comfort that we can tolerate fairly dramatic changes in the price of gold certainly quarter-to-quarter.
This company has over 20 years of positive operating cash flow consistently and because of that flexibility. So, Rick, at our current spend rate, I assume, we are $1,400 gold price would flatten us right out? Maybe $1,500? Rick is pounding his calculator right here.
Rick Johnson - Chief Financial Officer$1,400 exactly.
Neil McMillan - President, Chief Executive OfficerRight. So the point I made and it is heresy but we do think about it. The numbers I quoted to you about Santoy Gap, for example, we currently have that on the books at 6.68 grams per ton cut rate with three gram bottom cut. If we decided that, and there is 457,000 ounces there at that rate of 4.95. If we decided that we could continue to mine there, but we wouldn’t mine anything that’s graded under 5 grams.
Our head rate goes to over 8.5 grams per ton and we still have 357,000 ounces in front of us. You know why I have to do that? To high grade the project in order to stay in business but we have demonstrated in the past that regardless of the price of gold, we have the flexibility to continue to generate positive cash flow.
I don’t think we are in any less of a position to do that going forward and it gives me, I having been here for 17 years, some comfort. I am not aware of any point in time since I have been with this company where I was more comfortable with our flexibility in our operation.
seekingalpha.com
High grading the mine was their plan for survival. Now that they are in that mode, there is no money for the development of the other two projects and little money left over to service debt. |
